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News

Comparing the Costs of New Construction and Acquisition-Rehab In Affordable Multifamily Rental Housing

A recently published research working paper from the Center for Housing Policy titled Comparing the Costs of New Construction and Acquisition-Rehab In Affordable Multifamily Rental Housing  uses the lifecycle cost methodology to compare the total cost of developing and maintaining multifamily affordable rental housing for acquisition-rehab and new construction projects. The researchers’ analysis of a sample of more than 200 properties found that, all else equal, new construction added approximately $40,000 to $71,000 (25 to 45 percent) per-unit to the lifecycle costs.

The report findings suggest that acquiring and rehabilitating existing multifamily rental housing may be significantly more cost-effective than new construction when considering the costs of both developing a property and maintaining it in decent condition over a full 50-year lifecycle. 

The research paper is one component of a suite of products that focus on the costs of developing and maintaining affordable multifamily rental properties.  The full suite of products includes:

·         A technical paper describing how the lifecycle cost adjustment works and its impact on total development costs;

·         An online lifecycle cost modeling tool (L-Cycle, available at www.housingpolicy.org/lcycle), which allows users to input financial data on a property and obtain a quick estimate of the project’s ability to meet its long-term capital needs

·         A policy paper discussing the implications of lifecycle underwriting for policy and practice; and

·         A detailed research paper, to be submitted for publication to a journal, documenting the full methodology and results of our research.

Read the paper

 

— Posted on 3/25/2013

HUD and RD Disclose Sequestration Impacts on Rental Assistance

On March 7th HUD issued letters to PublicHousing Agencies estimating the impact of sequestration on funding levels for public housing and the Housing Choice Voucher program. In its letter HUD estimates that the Public Housing Operating Fund will be prorated to a historically low 73 percent of needed funding. The resulting financial pressure from sequestration could “critically degrade the ability to operate the public housing program.”

A March 11, 2013 Memo to from HUD Deputy Assistant Secretary Marie Head to Industry Partners and Section 8 Property Owners announced HUD’s plans to fully fund all contracts expiring in FY 2013 and the first quarter of FY 2014. However, all PBRA contracts expiring after that timeframe would be short-funded. HUD estimates that roughly 11,000 contracts will fall into this category, receiving an average of 8.5 months of funding.

Information on sequestration’s impacts to HUD housing programs can be found at the Sequestration Information page on HUD’s website.

USDA Rural Housing Services recently announced their planned response to sequestration found here on the National Council of State Housing Agencies (NCSHA) website.

RHS estimates the Sequestration will reduce the Rental Assistance Program by $45.5 million for Section 521, $125,000 for Rental Assistance to support new construction of Section 514/516 Farm Labor Housing, and $75,000 for Section 515 new construction. Rural Development announced they intend to renew rental assistance contracts for as long as funds remain during the course of the year, but could reach a point where contract renewals would cease (projected to occur in September 2013). The reduction in Rental Assistance would cause approximately 10,340 current recipients to lose Rental Assistance.

— Posted on 3/25/2013

Out of Reach Oregon

On March 12, 2013, the NationalLow Income Housing Coalition (NLIHC), released their annual report,Out of Reach 2013, which compares the income required to afford the average rent for each state and nationally. In most areas of the country rents continue to rise despite high unemployment and foreclosure rates.

 
Out of Reach data for Oregon shows that the average two-bedroom rent in Oregon is $832, which would require a $16 hourly wage to afford. A worker earing Oregon’s minimum wage of $8.65 per hour would need to work 72 hours per week, 52 weeks per year to afford the average two-bedroom rent.

 

— Posted on 3/25/2013

Congress Passes Continuing Resolution

On March 21, Congress passed a continuing budget resolution to fund the federal government through the end of FY 2013 which will continue funding programs at agency FY 2012 appropriated levels. The CR amounts are subject to the additional 5 percent funding reduction under sequestration. The president’s FY 14 budget is expected to be released on April 8th. The House passed its FY 2014 budget resolution on March 21 – the Senate on March 23.

— Posted on 3/22/2013